Until black swans were seen in Australia, swans were ‘predicted’ white. Today ‘Black Swans’ are improbable events with a dramatic impact. We have been tracking them since the GFC…
2008 coincided with the start of the Global Financial Crisis and the explosion of social media. So the past 7 years have been a pretty unique time for people interested in all things economics, social and politics to confront ideas, dig up new insights, and endlessly argue. This blog continues the chronicle started when we started blogging (like on our former Posterous http://lelaissezfaireisover.posterous.com/ ) and tweeting at that time.
We are now a little bit more knowledgeable and wiser about the economy: never let a crisis go to waste without learning what caused it. And a bit less naïve about the ways to reform the system: just think back of the declarations of contrition made by western leaders at the time…
In September 2008, liberal French president Nicolas Sarkozy denounced in an emphatic speech a system of madness was coming to an end.
“A certain idea of globalisation was ending with the crisis of financial capitalism which had imposed its logic to the whole economy and had perverted it.” He promised new regulations and swore that “the laissez-faire was over. The days of the market that was always right were over.”
In February 2009 the Labor Australian Prime Minister Kevin Rudd wrote an essay called simply “The Global Financial Crisis” in which he also declared that:
“the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes. Neo-liberalism, and the free-market fundamentalism it has produced, has been revealed as little more than personal greed dressed up as an economic philosophy.”
Pretty strong professions of faith, weren’t they.
Hence our double url TheOtherSchoolOfEconomics.org
The imposition of this laissez-faire ideology was pushed by outlets such as the infamous ‘Chicago School of Economics‘ which stood for decades as the intellectual engine of neoliberalism. So reclaiming the agenda will have to be done via ‘Other Schools of Economics’ – such as Thomas Piketty‘s Paris School of Economics.
Our analysis starts with a critique of ‘economism’, which is the reduction of all socio-economic interactions to their financial and commercial dimensions. It comes from the omnipotence of neoclassical economics as an ideology, in which supply and demand are used as the only important factors in decisions, while ignoring all other social, cultural, moral and political aspects.
In other words, economism is a side effect of the blind faith in Adam Smith’s “invisible hand” and “laissez-faire”.
The Black Swan Theory – hence BlaqSwans.org
The insight from every crisis of the capitalist system is that unexpected externalities regularly disprove the ‘efficient market hypothesis’ emanating from that blind faith in Adam Smith’s “invisible hand”. As the 2008 Credit Crisis, the 2011 Fukushima meltdown, or the 2013 horse meat scandal have illustrated, the ‘economism perfect grand plan’ rarely comes together (cue the A-Team).
So analysing those unexpected events offers a worthwhile angle, which goes beyond a circular criticism of capitalism and neoliberalism. Risk analyst and scholar Nassim Nicholas Taleb defined such unexpected events as ‘Black Swans’. The term comes from a common expression of impossibility, as black swans were presumed not to exist until they were found in Australia.
For Taleb such an improbable event has 3 attributes:
– it is an outlier, as it lies outside the realm of regular expectations, causing a ‘cognitive bias’ because nothing in the past can convincingly point to its possibility.
– it carries an extreme impact.
– human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.”In other words these Black Swans are the Global Credit Crisis and its sequels, the Fukushima nuclear meltdown, the 2013 horse meat scandal in Europe, and so on…
So this blog tracks such improbables through globalisation, from the GFC to the EU crisis: an ‘inside job’ from contributors in France and Australia, in English and French.
France. Politics, Economics.
“In the long run, we are all dead” KEYNES, A Tract on Monetary Reform (1923)
France. Politics, Social, Economics. Arts.
“Sociology is a martial art” PIERRE BOURDIEU
Australia. Politics, Economics.
“What I claim is to live to the full the contradiction of my time, which may well make sarcasm the condition of truth” ROLAND BARTHES